10.1 National Income Accounting and the Balance of Payments Other Concepts O Current account: mainly be used to record the total amount of imports and exports in goods and services Including Net Export, Investment Income, Transfer Payment. Defining that the NX is the net export, Y is the national income, E is the nominal exchange rate, P is the domestic price, Pis the foreign price, then: NX=g-nY-m·E 夏子终济器院
10.1 National Income Accounting and the Balance of Payments & Other Concepts Current account：mainly be used to record the total amount of imports and exports in goods and services. Including Net Export、Investment Income、Transfer Payment. Defining that the NX is the net export, Y is the national income, E is the nominal exchange rate, P is the domestic price, P* is the foreign price, then： * P P NX = g − nY − mE
10.1 National Income Accounting and the Balance of Payments Other Concepts o Because the Balance of Payments(BP) can be abbreviated to capital mobility and net export, then: BP=cF+NX a(r-r)+g-nr-mE P 复表经济学院
10.1 National Income Accounting and the Balance of Payments & Other Concepts Because the Balance of Payments (BP）can be abbreviated to capital mobility and net export, then： * * ( ) P P a R R g n Y m E B P CF NX = − + − − = +
10.2 The Determination of The Exchange Rate o Exchange rate is the relative price of the domestic currency and the foreign currency, and plays an important role in the international economic activities o The change of the exchange rate can directly affect the net export o The exchange rate can affect the domestic gross demand through the net export 复表经济学院
10.2 The Determination of The Exchange Rate Exchange rate is the relative price of the domestic currency and the foreign currency, and plays an important role in the international economic activities. The change of the exchange rate can directly affect the net export. The exchange rate can affect the domestic gross demand through the net export
10.2 The Determination of The Exchange Rate oA highly-abbreviated model s There are only two countries in the world, one is China the other is Canada; They only produce one product corn, people consume corn, and use it to invest seeds), government uses corn to pay. If the price of corn is 1 yuan per kilogram in China 1 Canadian dollar per kilogram in Canada Then the rate of exchange of RMB to canadian dollar should be 1:1 namely IrMB exchange 1 Canadian dollar 复表经济学院
10.2 The Determination of The Exchange Rate A highly-abbreviated model ❖There are only two countries in the world, one is China, the other is Canada; They only produce one product, corn, people consume corn, and use it to invest（ seeds), government uses corn to pay. If the price of corn is 1yuan per kilogram in China ,1 Canadian dollar per kilogram in Canada。Then the rate of exchange of RMB to Canadian dollar should be ？ 1：1 namely1RMB exchange 1Canadian dollar
10.2 The Determination of The Exchange Rate O Suppose that if the price of corn in China is 2yuan per kilogram, and 1 Canadian dollar per kilogram in Canada. Then what should the rate of exchange from RMB to Canadian dollar e 2: I namely 2yuan RMB exchanges Canadian dollars o Otherwise, if the price of corn in Canada rise to 2yuanRMB per kilogram, and 1Canadian dollar per kilogram in China Then what should the rate of exchange from RMB to Canadian dollar be? 1: namely luan RMB exchange 2 C anadian dolars 经济器院
10.2 The Determination of The Exchange Rate Suppose that if the price of corn in China is 2yuan per kilogram, and 1Canadian dollar per kilogram in Canada. Then what should the rate of exchange from RMB to Canadian dollar be ？ 2:1 namely 2yuan RMB exchanges1Canadian dollars Otherwise, if the price of corn in Canada rise to 2yuanRMB per kilogram, and 1Canadian dollar per kilogram in China. Then what should the rate of exchange from RMB to Canadian dollar be？ 1:2namely 1yuan RMB exchange 2 Canadian dollars